The gift card saga in New Jersey looks like it has finally wrapped up with Governor Chris Christie tying a bow on the proceedings by signing NJ S-2235, eliminating data collection requirements for sellers of qualifying gift cards and gift certificates. Those who have followed this story may recall that back in 2010 New Jersey passed a new gift card law, which made a number of changes including shortening the abandonment period and requiring gift card sellers to collect address information, or at a minimum zip codes, from gift card purchasers. The law was the first of its kind and led many companies, such as Blackhawk Network and InComm, to pull their gift cards from the state. In 2012, we reported that the Third Circuit upheld the law, including the data collection provision, but as we advised later that year, the state subsequently amended the law, extending the abandonment period to 5 years and delaying the collection requirement until July 1, 2016.
Since the law was amended in 2012, New Jersey has gone back and forth with merchants and gift card issuers over the implementation of the data collection provision. The forced collection of zip codes would have created substantial technical burdens for holders, who would need to implement significant and costly changes to their point-of-sale systems and business processes. Now that Gov. Christie has signed S-2235, however, it looks like gift card sellers can rest easier.
With the 2010 law, the New Jersey legislature tried to broaden the definition of “address” information to include a zip code, which would have triggered increased in-state reporting responsibilities under the first-priority rule and thus generating more revenue for the state. The New Jersey Office of Legislative Services (“OLS”) estimates that by eliminating the data collection requirement, the state stands to lose between $17.5 million and $26.3 million in 2023 (when unclaimed gift cards would be declared abandoned and reportable after the data collection requirement would have been implemented). In 2014 alone, New Jersey consumers lost an estimated $37.8 million in unclaimed gift card balances.
It remains to be seen whether another state will attempt to follow in New Jersey’s path and seek to require the collection of card owner zip codes at the point of sale. The highly unpopular move by the Bay State may scare off any such efforts, at least for the immediate future, and for now at least merchants can enjoy this gift and maintain their current information collection practices.
On a related note, a belated Happy Unclaimed Property Day to everyone out there. If you care enough to have read this far in the this blog, you will no doubt be interested to know that there is such a holiday, at least in South Carolina, where it was celebrated this last Wednesday, February 18th. Yes, the Palmetto State is pretty serious that it wants you to go get your money now, so check it out at http://www.treasurer.sc.gov/unclaimed-property/.